How Banks Are Using AI to improve Their Services?

Almost every industry, including banking and finance, has been significantly affected by artificial intelligence. The industry of banking and finance is now more customer-centric and technologically relevant. This has been made possible due to the use of AI in banking apps and services.  

By enhancing efficiency and making judgments based on data that is incomprehensible to a human agent, AI-based solutions can help banks cut costs. Additionally, robust algorithms may quickly detect false information.  

According to Business Insider research, around 80% of banks know the potential advantages AI could bring to their industry. According to another estimate, banks are expected to save $447 billion by utilizing AI apps by 2023. These figures show that the banking and finance industry is moving quickly toward AI to increase production, decrease expenses, and improve efficiency.  

In this article, we’ll learn about the main uses of AI in the banking and finance industry and how its extraordinary advantages are changing client service.  

Applications Of AI In Banking And Finance 

• Robo Advice  

Automated guidance is one of the most contentious issues in the financial services industry. By examining data that customers have shared and their financial history, a Robo-advisor tries to understand a client’s financial situation. The Robo-advisor can make suitable investment recommendations in a specific product class, even down to a specific product or equity, based on this analysis and the client’s goals. All this can only be leveraged with the help of AI-based algorithms.   

• Understanding The Predictive Analytics  

Predictive analytics and general-purpose semantic and natural language applications are two of the most prevalent use cases for AI. Data patterns and correlations can be found by AI previously undetectable by traditional technology. These trends could point to underutilized cross-sell or sales opportunities, operational data measures, or even revenue-impacting variables.   

•  Cybersecurity And Fraud Detection

Large numbers of digital transactions happen daily as consumers utilize applications or online accounts to pay bills, withdraw money, deposit checks, and do much more. As a result, the banking industry must increase its cybersecurity and fraud detection efforts. 

This is when artificial banking intelligence enters the picture. AI can assist banks in reducing risks, tracking system flaws, and enhancing the security of online financial transactions. AI and machine learning can quickly spot fraudulent activity and notify customers and banks.   

For instance, Danske Bank, the largest bank in Denmark, replaced its previous rules-based fraud detection system with a fraud detection algorithm. The bank’s ability to detect fraud was enhanced by 50% thanks to this deep learning method, which also decreased false positives by 60%. While directing some cases to human analysts for additional examination, the system also automated many key choices. All in all, AI can also assist banks in managing online dangers.  

• Chatbots

Unquestionably, chatbots are among the best examples of how artificial intelligence is used in banking. They can work around the clock once deployed, unlike people who have set working hours.   

They also continue to learn more about certain customers’ usage habits. It aids in their effective understanding of user requirements. The banks may guarantee they are accessible to their consumers 24 hours a day by introducing chatbots into their banking apps. Additionally, chatbots can provide individualized customer care and make appropriate financial service and product recommendations by comprehending consumer behavior.  

• Credit And Loan Decisions

Banks have begun implementing AI testing solutions to make better, safer, and more profitable loan and credit choices. Currently, many banks only consider a person’s or business’s creditworthiness based on their credit history, credit ratings, and customer references.   

One cannot ignore that these credit reporting systems frequently contain inaccuracies, exclude real-world transaction histories, and incorrectly identify creditors. Customers with little credit history can use an AI-based loan and credit system to analyze their behavior patterns to assess their creditworthiness. Additionally, the technology notifies banks of certain actions that can raise the risk of default. In short, these technologies are significantly altering how consumer lending will be done.  

• Tracking Market Trends 

Thanks to artificial intelligence in financial services, banks can process huge amounts of data and forecast the most recent market movements, currencies, and equities. Modern machine learning methods offer investment suggestions and assist in evaluating market sentiment.   

AI for banking also recommends when to buy equities and issues alerts when there is a possible risk. This cutting-edge technology also helps speed up decision-making and makes trading convenient for banks and their clients due to its high data processing capability.  

• Data Collection And Analysis

Every day, financial and banking institutions record millions of transactions. Due to the vast amount of information generated, it becomes difficult for employees to collect and register it. It becomes impossible to structure and record such a large amount of data without making any mistakes. AI-based creative solutions can aid in effective data collection and analysis. Thus, the whole user experience is enhanced. Additionally, the data may be utilized to identify fraud or make credit decisions.   

• Enhanced Customer Experience (CX)  

Customers are always looking for a more convenient experience. For instance, ATMs were successful because they allowed clients to access necessary services like money withdrawal and deposit even when banks were closed. 

This level of convenience has only spurred more innovation. Customers can now use their smartphones to open bank accounts from their homes.  

Artificial intelligence integration will improve user comfort and the customer experience in banking and finance services. AI technology speeds up the recording of Know Your Customer (KYC) data and eliminates mistakes. Additionally, timely releases of new goods and financial offers are possible.  

• Predictive Analytics

Predictive analytics and general-purpose semantic and natural language applications are two of the most prevalent use cases for AI. Data can have special patterns and connections that AI can identify previously invisible to traditional technology. 

These trends could point to underutilized cross-sell or sales opportunities, operational data measures, or even revenue-impacting variables.   

Wrapping Up! 

As we can see, banking and Artificial Intelligence (AI) go hand in hand due to the numerous advantages that this technology provides. Forbes reports that 65% of senior finance management expects AI and machine learning to improve banking.   

Thus, to provide consumers with innovative experiences and top-notch services, all banking institutions must invest in AI technologies.